Italy’s Conte Names Cabinet With Gualtieri as Finance Minister

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(Bloomberg) -- Giuseppe Conte secured his return as Italy’s prime minister less than a month after being forced from power -- this time at the head of a coalition with both populists and establishment politicians.

The 55-year-old Conte, an unknown Florence law professor just over a year ago, will get a second chance to lead Italy’s government after formally accepting a mandate from President Sergio Mattarella on Wednesday.

Mattarella last week tasked Conte with putting together a working majority between the anti-establishment Five Star Movement, the senior party in Italy’s last government, and the center-left Democrats, who’ve led three of the last four administrations.

Italy’s Conte Names Cabinet With Gualtieri as Finance Minister

Conte’s choice of ministers suggests a far more pro-European stance. Leading Rome’s attempt to boost a stagnating economy and win approval from the European Commission for the 2020 budget: veteran European lawmaker Roberto Gualtieri, 53.

In returning to the 16th century Palazzo Chigi prime minister’s residence, Conte skilfully outmaneuvered his former deputy Matteo Salvini of the rightist League, who spooked investors early last month with a surprise mid-summer bid to force snap elections.

As the de facto leader of the last government, Salvini reveled in challenging the EU over budgets and migrants, while courting populist peers like France’s Marine Le Pen and Hungary’s Viktor Orban.

Conte, who was often derided as a puppet of deputies Salvini and Five Star’s Luigi Di Maio in the last government, now emerges as a stronger leader.

Italy’s Conte Names Cabinet With Gualtieri as Finance Minister

Conte personally oversaw the drafting of the new government’s program, and his powers appear clearer after Di Maio, who will now take over the foreign ministry, was forced to abandon the deputy’s post.

The new administration’s priorities include an expansionary 2020 budget, averting a sales-tax hike, cutting taxes on labor, setting a minimum wage and demanding a review of EU fiscal rules. Avoiding the sales tax hike will require finding savings of about 23 billion euros ($25 billion).

Italy’s Conte Names Cabinet With Gualtieri as Finance Minister

Investors rallied behind Conte’s second turn as premier. Italian bonds climbed for a third day after Conte won backing to form a new government.

“The formation of the new government ends the summer political crisis in Italy and gives short-term relief to investors,” said Matteo Germano, head of multi-asset investments at Amundi, Europe’s largest fund manager.

Even though Salvini’s exit could usher in a calmer period for Italy’s government, Five Star and the Democrats also have a history of bad blood, so fireworks between the two parties can’t be ruled out.

Conte will also need to keep an eye on Salvini, who continues to call for new elections. Despite a dip in opinion polls after the botched power grab, the League remains the country’s most popular party.

Salvini will almost certainly pounce on any tensions between Five Star and the Democrats to back his assertion that the new administration is an anti-democratic, backroom stitch-up.

“How can you go from a ministry with 150 pending company crises to the foreign ministry?,” Salvini said on state TV broadcaster RAI, lambasting his former ally Di Maio.

©2019 Bloomberg L.P.

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